Hey there! Navigating the home-buying process can feel overwhelming, especially when you’re doing it for the first time. But don’t worry—I’m here to help you understand the Denton Homebuyer Assistance Program, a fantastic resource that could make your journey to homeownership in Denton, Texas, a lot smoother.

Program Name

Denton Homebuyer Assistance Program

Source of Funding

This program is funded through federal grants from the U.S. Department of Housing and Urban Development (HUD) and is administered by the City of Denton’s Community Development Department.

Eligibility Criteria

• First-Time Homebuyer: You must not have owned a home in the past three years. Exceptions are made for displaced single parents or those owning a substandard mobile home.
• Residency Status: Applicants must be U.S. citizens or legal residents.
• Mortgage Qualification: You need to qualify for a mortgage loan from a participating lender. The program has specific requirements regarding interest rates, debt-to-income ratios, and loan types. Non-occupant co-borrowers or co-signers are not eligible.
• Financial Contribution: A minimum contribution of 1.75% of the sales price toward the purchase is required. Additionally, you should have cash reserves equal to one month of mortgage payments after making this contribution.
• Primary Residence: You must agree to live in the home as your primary residence for the duration of the forgivable loan term, which ranges from five to fifteen years, depending on the assistance amount.
• Homebuyer Education: Attendance at a HUD-approved homebuyer education program is mandatory.
• Income Limits: Your household income must not exceed 80% of the Area Median Income, adjusted for family size. For example, as of October 1, 2022, the limit for a four-person household is $77,900.

Benefits

• Financial Assistance: The program offers up to $50,000 in down payment and closing cost assistance. This comes as a 0% interest forgivable loan, with the term length depending on the assistance amount:
  • Up to $14,900: 5-year term
  • Up to $50,000: 15-year term
• Repair Funds: An additional grant of up to $10,000 is available to address program-required repairs after closing but before move-in.

Potential Drawbacks

• Forgiveness Period: The assistance is structured as a forgivable loan, meaning you must reside in the home for the entire term (5 to 15 years) to avoid repayment. If you sell, lease, or transfer the property before the term ends, you may need to repay the remaining balance.
• Property Restrictions: The property must be within Denton city limits and meet specific standards. Homes built before 1970 may require significant system upgrades, and those built before 1978 must be free of deteriorated paint due to lead-based paint regulations.

Application Process

1. Contact a Participating Lender: Begin by reaching out to a lender approved by the program to assess your mortgage eligibility.
2. Preliminary Approval: The lender will submit your application to the City of Denton for preliminary program approval, which is valid for three months and can be extended with a signed earnest money contract.
3. Homebuyer Education: You must complete a HUD-approved homebuyer education course before final approval.
4. Find a Home & Get a Sales Contract: The home must be within Denton city limits and meet program requirements.
5. Home Inspection & Repairs (if needed): The city will conduct an inspection, and any required repairs must be completed before closing.
6. Final Approval & Closing: Once all requirements are met, the city issues final approval, and you proceed to closing with the financial assistance applied.

Program Type

• Forgivable Loan (Down Payment & Closing Cost Assistance)
• Repair Grant (Up to $10,000 for eligible fixes)

Program Availability

Denton, Texas

Pros & Cons

Pros ✅

• ✔️ Up to $50,000 in assistance for down payment and closing costs
• ✔️ Forgivable loan (no repayment if you stay in the home for the required period)
• ✔️ Additional repair funds available (up to $10,000)
• ✔️ No interest on the loan

Cons ❌

• ❌ Long forgivable period (5-15 years, depending on assistance amount)
• ❌ Income limits apply (must be under 80% of Area Median Income)
• ❌ Only available in Denton city limits
• ❌ Property must meet strict conditions (some homes may require repairs before move-in)

Source & More Info

🔗 City of Denton Official Website